Why don't BNR buy more gold and how Trump is trying to handle the market to strengthen the dollar
The Romanians invested massively in gold in the first quarter, 65% more than last year, despite the high price fluctuations caused by Trump's statements. However, the BNR policy on Romania's gold reserves is completely different.
The price of gold fluctuated a lot in April. Photo shutterstock
Donald Trump's statements have led to serious fluctuations in the price of assets, including gold. Only in April this year, the price of gold varied between a historical record of $ 3,500 per troy and $ 2,960 per troy, a huge fluctuation in a short range.
According to a survey of the World Gold Council, conducted in June 2024, the most cited reason why central banks hold gold is the lack of risk of investment loss. “Physical gold – in the form of ingots or coins – does not present a counterparty risk, as opposed to assets such as bonds or actions. Once the transaction has been completed, the gold becomes the property of the buyer. Other reasons include gold performance in periods of crisis and inflation protectionI ”, says Victor Dima, manager of the Tavex Romania Treasury Department.
BNR does not expand its gold reserves
Talking about the reasons why the NBR does not extend its gold reserves, as opposed to Poland, the Czech Republic and even Hungary, the latter exceeding Romania in terms of gold in September 2024, the response of the central bank to Daniel Voloscuk, economist of Tavex Romania, was that “The bank's strategy is to ensure liquidity for financial markets – mainly, to foreign currency ”.
Thus, the NBR managed to artificially maintain the EUR/RON exchange rate around 4.97.
The prices also increased in Romania, from 346.18 lei/gram to July 1, 2024, at a historical peak of 480 lei/gram on April 22, an increase of over 38% in less than a year.
From July 2024, the price of gold increased by over 38%. Meanwhile, the National Bank of Poland has purchased 103 tonnes of gold, increasing its share of gold reserves in total international reserves to almost 21%. Romania owns, currently, 103.6 tonnes of gold representing 9.5% of the reserves held by the NBR.
Romanians bought 65% more gold
Regarding the amount of gold purchased by Romanians, it increased in the first quarter of this year by about 65% compared to T1 2024. The reasons are multiple. “We are talking about a development of the Investment Gold Market in Romania. More investors decide to include gold in the investment portfolio. But, of course, an important engine was the unusual increase in the price of gold from the last year. On the other hand, there is a decrease in the amount of gold of investments that Romanians sell, which is a good sign. Thus, Romanians begin to understand that although the price of gold has increased significantly in the last year, the future can bring even higher yields“Adds Victor Dima.
However, Romanians who sell in this period are those who hold jewelry. The amount of gold in the form of jewelry sold by Romanians to Tavex Romania increased by almost 170% in T1 2025 compared to the first three months of 2024. The main reason is the one related to the price increase of the yellow metal.
The rates and the dollar value: between economic and geopolitical strategy
In 1944, 44 Western countries agreed to establish a fixed currency exchange rate regime (Bretton Woods agreement). Each country was to set a fixed course against the US dollar – with the possibility of fluctuation of only 1% around the established course. In return, the US dollar was fixed by gold at a $ 35 rate for an ounce of gold (31.1 grams).
The system has established, beyond these courses, the infrastructure of the global financial system by creating two institutions: the International Monetary Fund and the International Bank for Reconstruction and Development (or the World Bank, later renamed). The whole system worked as long as the US financed the rebuilding of the international industry in a newly out of the world below the fiercest war in history. Problems began to arise when the countries that signed the Bretton Woods agreement were becoming more and more dollars into gold.
Half USA gold reserves since the conclusion of the Bretton Woods agreement in 1944 and until the end of the 1960s destabilized the entire system. Thus, on August 15, 1971, US President Richard Nixon ended the convertibility of the US dollar in gold.
Trump's counselor believes the dollar is overvalued
In a paper published in November 2024, Stephen Miran, the current Donald Trump's economic policy counselor, explains that the US dollar is currently overvalued with other currencies. For this reason, the US would not be competitive enough to export goods to other countries.
According to Miran, under the current system, the United States exports dollars and government bonds, essential for global financial markets, and receives consumer goods. It raises two problems of this Modus operandi. First of all, Miran believes that the current system only benefits the rich, those who are present on the scholarships. The second problem is that, given that a significant part of the US manufacturing industry has been moved to China, Mexico or other countries where work is up to 20 times cheaper, the American economy does not keep up with the growth of the global economy.
The same Miran presents three solutions for this problem. The first of the solutions concerns the rates. According to Miran, the rates could be used as a lever by the US to negotiate with countries that have significant parts of the American debt to accept a devaluation of the dollar, such as the one in the 1985 Plaza agreement. These countries with which the US could negotiate, include Japan (holding $ 1.08 trillion from US debt), UK ($ 740 billion), Luxembourg ($ 410 billion) and Belgium ($ 378).
The second solution is to negotiate the debt by threatening to reduce the US military presence in various strategic partner countries with them. The third solution is a restructuring of the public debt. This would imply either the respective countries to accept delayed interest payments, payments that exceeded US military spending, reaching $ 896 billion, or accepting the extension of the maturity of obligations over 50 or even a hundred years.
These solutions-taken separately, or even together-could, MIRAN think, reduce from the risk of the United States to enter into a spiral of debt in an attempt to maintain the international reserve currency.
